Under the Concept of an Efficient Market,a Random Walk in Stock

question 8

Multiple Choice

Under the concept of an efficient market,a random walk in stock prices means that:

• A) there is no driving force behind price changes.
• B) technical analysts can predict future price movements to earn excess returns.
• C) the unexplained portion of price change in one period is unrelated to the unexplained portion of price change in any other period.
• D) the unexplained portion of price change in one period that cannot be explained by expected return can only be explained by the unexplained portion of price change in a prior period.
• E) None of these.

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Definitions:

Cyclical Unemployment Rate

The rate of unemployment caused by changes in the economic cycle, such as recessions or expansions.

Frictional Unemployment Rate

Frictional Unemployment Rate refers to the percentage of the labor force that is voluntarily moving between jobs, careers, or locations.

Structural Unemployment Rate

The long-term and chronic unemployment that exists even when the economy is at its productive best, often due to mismatches between skills and job requirements.

Overall Unemployment Rate

A percentage that represents the portion of the labor force that is not currently employed but is actively seeking employment.